“There’s currently a lot of uncertainty in the buy-to-let market around what the change in government means for landlords but they have also been hit by steep interest rate rises and rising costs generally, so it’s likely there are several factors at play here”
– Katy Billany – TwentyEA
New figures from TwentyEA show that the number of properties currently ‘for sale’ that were listed ‘to let’ in the past three years has risen dramatically.
In June 2024, 18.4% of all properties listed for sale had also been listed for rent within the three years prior to the sale listing. This was just over 28,000 properties and was 100.6% higher than in June 2023 and also 34.6% higher than in June 2019. It was also 27.4% higher than May 2024 – the month that Rishi Sunak called the General Election for 4 July.
Katy Billany, Executive Director of TwentyEA, said: “There’s no doubt our data shows a significant uplift in the number of landlords selling up, either reducing their portfolio size or possibly exiting the sector completely.
“There’s currently a lot of uncertainty in the buy-to-let market around what the change in government means for landlords but they have also been hit by steep interest rate rises and rising costs generally, so it’s likely there are several factors at play here.”
Further market insights show that 2024 is generally showing a return to a sense of normality with the supply of ‘New Instructions’ up by 8.6% at around 477k for the quarter and ‘Sales Agreed’ having increased by 15.1% compared to Q2 2023. Both metrics have now exceeded the levels seen before the Truss/Kwarteng tenure and those prior to mortgage affordability and availability challenges.
Exchanges also increased by 10.4% compared with Q2 2023, showing recovery from the stalling effect of the sales market in Q3 and Q4 of 2023 when significant interest rate changes took effect. Properties priced between £200k to £350k have seen an increase of over 3.5% in exchanges, while those in the £350k to £1m range are up by 1.3%.
Billany added: “These segments are considered the core of the residential property market and are essential for overall market vitality; without growth here, the market stagnates. Conversely, the lower end of the market, properties up to £200k, has declined by 4.6% as first-time buyers have faced significant challenges due to mortgage availability, affordability issues, and limited stock. For properties priced over £1m, a decline of 2.3% indicates that even those less affected by affordability concerns are experiencing a subdued market at the upper end.”
TwentyEA further analysed exchanges to understand the role of demographics.
They found exchanges increased by 12.8% among elderly households (age 66+). Likely unencumbered by mortgages, these individuals have greater flexibility to move, whether upsizing or downsizing, without financial constraints.
The findings revealed a modest increase in exchanges among those aged 46-65. Although this age group is affected by market conditions, they are more resilient compared to younger groups. For all age bands under 45, there has been a dramatic reduction in the volume of exchanges. This significant drop reflects the substantial financial pressures faced by younger demographics due to rising mortgage interest rates.
Billany said: “This analysis highlights how different age groups are uniquely impacted by current economic conditions. Older, mortgage-free individuals can navigate the market more freely, while younger age groups face greater financial obstacles.”
Furthermore, income brackets of those buying properties were also examined and found the volume of property exchanges declined across all household income brackets below £50,000, reflecting the widespread impact of current economic conditions. The chart below shows how the volume of exchanges has increased or decreased across income bands.
Billany concludes: “While property exchanges have increased in Q2 2024 compared to Q2 2023, this is not a universal trend across all income brackets. The degree of impact varies significantly, with higher-income households demonstrating greater resilience in the face of economic challenges.”